All the signs are that the Westminster Government is now urgently seeking a radical reform to business rates as a means of generating local tax revenues in England, at the latest by 2022.
We believe that there are distinct advantages of self-certification and asking ratepayers to accurately submit their own property valuations with limited civil service supervision or costs. The benefit of any type of property tax is that it is immune from evasion because it is impossible to hide bricks and mortar.
Business rates are a central feature of tax on real estate across the whole of the UK, realising £30BN to Governments in England, Wales, Scotland and Northern Ireland. The trick for Government is to retain and grow such a reliable tax revenue at the lowest conceivable cost. The benefit to the taxpayer is certainty and self-determination.
At the moment it costs the Westminster Government somewhere in the order of £55M per annum to employ the Valuation Office Agency to deal with the preparation and defence of a 5 yearly revaluation and the Government now seems even more determined to reduce that cost. The Westminster Government’s obsessions with cost cutting has already proved detrimental to an expeditious and, some would suggest, fair treatment of ratepayers.
In England and Wales the VOA employs 3,600 staff across 5 main regional offices. Rateable Values are subject to periodic reviews (revaluations) with the next one due in April. Rateable Value assessments (a rental values) are subject to a nationally imposed multiplier and councils have a statutory duty to charge and collect rates annually.
The unusually long delay in revaluation (7 years) combined with a lethargic appeal system has led to the increasing unpopularity of rates. The Government now appears ready to shrink the VOA to an absolute minimum and this signals the advent of self-assessment by 2022. Such a system is eminently workable in line with a system first muted 15 years ago, and would require the preservation of an appeals regime. Self-assessment would require mandatory submissions by ratepayers, subject to receipt and ‘objection’ by the VOA as guardians of fairness.
A system of self-certification could work subject to a system of 5 yearly ratepayer valuations and a VOA initiated annual review.
The advantages of self-assessment can be summarised as follows:
- Cheaper for Government to resource.
- In line with self-assessment of other UK taxes.
- Professional rules could be applied to valuations for rating.
- Predictability for ratepayers.
- Potential lack of consistency.
- Possible deliberate under-assessment.
- Additional cost to ratepayers of professional fees.
- The unknown.
There remains uncertainty about the Government’s much heralded ‘Check, Challenge, Appeal’ (CCA) regime. The Government’s IT challenges are enormous and we expect many months of turmoil while ratepayers seek ways and means of making proper challenges and achieving correctness and fair outcomes.
The inevitable consequence of the CCA regime is a step further towards full self-assessment by ratepayers. The Government is determined to eradicate uncertainty, evasion, bureaucratic cost and the prevalence of unscrupulous ‘rating advisors’.
The potential for taxpayers to self-assess with supporting data will grossly reduce the need for an unwieldly civil service and a drawn out appeals regime, but it will place a serious onus on ratepayers at the point of self-certification.
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